Mutual Fund1

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SUBMITTED TO: SUBMITTED BY:

MRS.SIMMI VASHISHTHA SUKHWINDER

KARISHMA

MBA(SM) F

MUTUAL

FUND


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CONTENT

MEANING OF MUTUAL FUND WORKING

REGULATORY BODY

HISTORY

TYPES ADVANTAGES

DISVANTAGES

SELECTION PROCEDURE

HOW TO INVEST INVESTMENT MENU CARD

SEBI REGULATION

MANAGEMENT


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MUTUAL FUND

A mutual fund is the trust that pools the

savings of a number of investors who

share a common financial goal.
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REGULATORY BODY FOR MUTUAL FUND

Securities Exchange Board of India (SEBI) is the

regulatory body for all the mutual funds. All

the mutual fund must get registered withSEBI.
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HOW MUTUAL FUND WORKS


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BRIEF HISTORY

1964- UTI was established.

1987- entry of Public Sector banks.

Canara bank (Canbank)

SBI (magnum regular income)

1989- LIC (dhanraksha, dhanvridhi)

1990- GIC (GIC safe,GIC rise)

1995- Entry of Private Sector.


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SCHEMES OF MF

TYPES

OWNERSHIPSCHEMES OF

OPERATIONPORTFOLIO LOCATION


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ACCORDING TO OWNERSHIP

OWNERSHIP

PUBLICSECTOR

PRIVATESECTOR


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ACCORDING TO SCHEMES OF OPERATION

SCHEMES OF

OPERATION

OPEN ENDED

SCHEMES

CLOSE

ENDED

SCHEMES

INTERVAL

SCHEMES


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PORTFOLIO

INCOME FUND

GROWTH FUND

BALANCED FUND

STOCK/EQUITY FUND

BOND FUND

SPECIALISED FUND

TAXATION FUND


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ACCORDING TO LOCATION

LOCATION

DOMESTIC

FUNDS

OFF-SHORE

FUNDS


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ADVANTAGES OF MUTUAL FUND

1. Diversification

2. Professional fund management

3. Liquidity

4. Reduced risk

5. Tax advantage

6. Flexibility

7. Higher returns

8. Investor protection

9. Choice of schemes
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LIMITATIONS OF MUTUAL FUND

Liquidity crisis

Lack of innovation

Inadequate research

No provision for performance guarantee

Inadequate disclosure

Delay in service

No rural investment

Poor risk management


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INVESTING CHECKLIST

Draw up your asset allocation Financial goals & Time frame (Are you investing for retirement? A

childs education? Or for current income? )

Risk Taking Capacity

Identify funds that fall into your Buy List

Obtain and read the offer documents

Match your objectives

In terms of equity share and bond weightings, downside risk protection,tax benefits offered, dividend payout policy, sector focus

Check out past performance Performance of various funds with similar objectives for at least 3-5

years (managed well and provides consistent returns)


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CHECKLIST CONTD

Think hard about investing in sector funds

For relatively aggressive investors

Close touch with developments in sector, review portfolio regularly

Look for `load' costs

Management fees, annual expenses of the fund and sales loads

Diversify, but not too much


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INVESTMENT MENU CARD

Instrument Tax Benefit Return Duration

EPF 8.50% Long TermPPF 8% Long Term

NSC 8% Long Term

FDs Banks & Post Office 5.70 to 8.50% Short Term

Senoir Citizen Savings

Scheme

9% Long Term

Mutual Funds Market Linked Long Term & ShortTerm

ULIP Market Linked Long Term

Direct Equity Market Linked Long Term

Gold Market Linked Short Term

Real Estate Market Linked Long Term


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How to invest in Mutual Funds?

Step 1 Identify your

investment needs

1. What are my investment

objectives and needs?

2. How much risk am I willing

to take?

3. What are my cash flow

requirements?

Step 2 Choose the right

mutual fund.

1. The track record of

performance over the last few

years in relation to theappropriate Benchmark and

similar funds in the same

category

2. How well the mutual fund is

organized to provide efficient,

prompt and personalized

service.

3. Degree of transparency as

reflected in frequency an d

quality of their communications.

Step 3 Select the ideal

mix of schemesInvesting in just 1

scheme may not meet all

your investment needs.

You may consider

investing in a

combination of schemes

to achieve your specific

goals.
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FACILITIES AVAILABLE TO INVESTORS

Repurchase Facilities

Reissue Facilities

Roll Over Facilities

Lateral Shifting Facilities
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SEBI REGULATION,1996


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MANAGEMENT OF MUTUAL FUND

Sponsor

AMC (Asset Management Company)

Custodian

Trustee


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Sponsor :-

Any person who alone or incombination with another body establish a

mutual fund is called as sponsor

Trustee :-

Trustee is a person who holds

the property of MF interest for the benefit ofunit holders and includes a trustee company

and directors of trustee company


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AMC:-

The sponsor or the trustee shall

appoint an AMC. The application for AMC has

to be made in form D.

Custodian:-

Custodian is a person who has been

guaranteed is a certificate of registration to

carry on the business of custodian of

securities.
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THE SPONSOR

Application and Fee

Eligibility Criteria

Grant of Certificate of Registration

Service Fee

Net Asset as on 31st March

(RS. Crores)

Services fee payable

(rs. Lakhs)

Upto 500 2.50500-1000 3.50

1000-3000 4.50

3000-5000 5.50

5000-10000 6.50

Above 10000 7.50
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THE TRUSTEES

Regulation 14: Trust deed to be registeredunder the Registration Act

Regulation 15: Contents of trust deed

Regulation 16: Disqualification from beingappointed as trustees

Regulation 17: Approval of the Board for

appointment of trustees Regulation 18: Rights & obligations of the

trustees


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ASSET MANAGEMENT COMPANY

Regulation 21: Eligibility criteria for appointmentof asset management company

Regulation 22: Terms and conditions

Regulation 23: Procedure where the approval isnot granted

Regulation 24: Restrictions on business activitiesof the asset management company

Regulation 25: Asset Management Company andits obligations


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CUSTODIAN

Regulation 26: Appointment of custodian

Regulation 27: Agreement with the custodian


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SEBI REGULATION 28 TO 42- LAUCHING OF

MUTUAL FUNDS


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ADVERTISEMENT CODE

An investment shall be truthful, fair, clear, and

shall not contain a statement, promise or

forecast which is untrue or misleading.

The advertisement not to be designed in

content and format or in print as to be likely

to disguise the significance of any statement.

The sales literature may contain only

information.
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SUMMING UP

A mutual fund represents a vehicle for collective investment.

In India, the following entities are involved in a mutual fundoperation the sponsor, the mutual fund, the trustees, the AMC,the custodian, and the registrars and transfer agents.

A mutual fund scheme may be a close-ended or an open-ended

scheme. Mutual funds invest in three broad categories of financial assets:

stocks, bonds, and cash.

The investments of a mutual fund are subject to certain regulations.

Mutual fund schemes are periodically evaluated by independent

institutions.

Mutual funds offer various options and value-added services toattract and retain customers.

Mutual funds offer the advantages of diversification, professionalmanagement, liquidity, assured allotment, tax savings etc.


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